In Brief
The Supreme Court held that Kerala State Co-operative Agricultural and Rural Development Bank (KSCARDB), an apex co-operative society providing long-term credit only to member co-operative societies, is not a 'co-operative bank' under Section 80P(4) of the Income Tax Act, 1961. The Court clarified that 'co-operative bank' means only state, central, or primary co-operative banks declared under the NABARD Act and engaged in banking business (accepting public deposits). Since KSCARDB lends only to member societies and was not declared a co-operative bank, it qualifies as a co-operative credit society entitled to full deduction of profits under Section 80P(2)(a)(i). The Court set aside orders denying deduction and allowed the appeals.
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